finance and Marketing
Textbook(s)
Kapoor, J. R., Dlabay, L. R., Hughes, R. J., & Hart,
M. M. (2015). Personal finance (11th ed.). New
York, NY: McGraw-Hill Education .
word count 100 each questions, all parts of questions must be answered, APA, Reference and good English and grammar, correct word count and, no cover sheet, just answer question. Please use citation and reference if needed. Reference goes after each question.. Must use 2 references. use the book for 1 of the reference
1. Why does money have a “time value”?
2. There is a saying that “time is money”. What is meant by that? How is this the same – or different – than the idea of the time value of money?
3. Find the future value of $5,000 invested in each of the following situations:
a. 5 percent for 10 years
b. 7 percent for 7 years
c. 9 percent for 4 years
4. What is the present value of $5,000 to be received in each of the following situations:
a. at end of 10 years with a 5% discount rate.
b. at the end of 7 years when the appropriate interest rate is 7%.
c. at the end of 9 years using an interest rate of 9%.
5. What is the return on an investment that costs $500 today and will return $800 at the end of 4 years?
6. What long will it take a $100 investment to double to $200 if the interest rate is 6%?
7. What is the present value (PV) of a loan that calls for the payment of $500 per year for six years if the discount rate is 10 percent and the first payment will be made one year from now? How would your answer change if the $500 per year occurred for ten years?
8. You are considering borrowing $150,000 to purchase a new home. Calculate the monthly payment needed to amortize an 8 percent fixed-rate 30-year mortgage loan.
Solution Preview
1. Assuming you have been given an option of investing your money say $100 in a bank at a 10% risk-free interest, and let us assume someone has offered to either give you $100 now or $109 after one year or $120 after two years. If you decide to put $100 in a bank at a 10% risk-free interest then after one year you will have $110, and after two years you will have $121.
(477 words)